Ramsay pulls guidance amid COVID-19 chaos

Ramsay Health Care, the nation's largest private hospitals operator, has pulled its full-year guidance because of the ongoing uncertainty surrounding the spread, duration and impact of the coronavirus.

Ramsay is one of the largest private healthcare providers in the world, operating across nearly 500 locations in 11 countries. The stock tumbled $5.13, or 8.61 per cent, to $54.44 on Wednesday.

Ramsay CEO Craig McNally pulled full-year guidance on Wednesday, adding it to the long list of companies caught up in the COVID-19 uncertainty. Cole Bennetts

The $12 billion company said it will move to assist governments with managing the virus, which has forced airlines and travel companies to the brink of collapse and moved many Australians to hoard groceries.

Ramsay boss Craig McNally warned Wednesday morning that the rapid spread of COVID-19 in Europe has resulted in deferred surgery in some regions, as governments seek extraordinary support from private operators to deal with capacity requirements.

Related Quotes

Advertisement

"Specific details of the extent of this support including volume, casemix and reimbursement are still being finalised," he said.

In France, where Ramsay is the largest private hospitals operator, President Emmanuel Macron gave a TV address to the nation announcing sweeping new measures to stem the spread of the new COVID-19 virus. AP

“The French government has cancelled all non-urgent surgery while our hospitals are providing much needed capacity and services as required by the French Ministry of Health.

"In the United Kingdom, elective surgery has not been cancelled but we are in discussions with the NHS to provide services and capacity to help deal with the impact of COVID-19.”

It was only in late February that the company confirmed full-year guidance for core earnings per share growth of 2 per cent to 4 per cent, or negative core EPS growth of -6 per cent to -4 per cent under new lease accounting standards.

The full-year guidance is based on core earnings before interest, tax, depreciation, amortisation and restructuring or rent costs growth of between 8 per cent and 10 per cent.

Mr McNally said it was too early to determine the full impact of COVID-19 on its Australian operations but flagged as the number of cases escalate, there will be an impact on private volumes in the short term.

Advertisement

"However, in some cases, we are seeing decisions to fast-track elective surgery in order to minimise any future potential disruption," he added.

Mr McNally reiterated that its Australian hospitals are also willing to assist the public health sector by undertaking urgent and elective surgery to ease the surgical burden, as well as provide capacity to cater for COVID-19 patients if required.

"Our hospitals are well-prepared to manage the impacts of COVID-19," he said. "We have strict infection control and prevention protocols in place to protect our staff and healthcare workers. These measures are enabling us to continue to provide world-class care and treatment to patients.

A patient in a biocontainment unit is carried on a stretcher at the Columbus Covid 2 Hospital in Rome, a major hot spot. Alessandra Tarantino

“In addition to country-specific COVID-19 response teams, we have a global COVID-19 response team to keep up to date with the evolution of the outbreak and to continually monitor the impact on our business, our staff and supply chains.

“The Ramsay Wholly Owned Funding Group, which governs Ramsay’s ability to borrow in its own right and which excludes Ramsay Sante’s non-recourse debt, has headroom in its existing debt facilities the earliest of which is not due to expire till October 2022.

"Ramsay Sante, which is a separate listed entity, also has committed debt facilities, the earliest of which is not due to expire till October 2022."

Advertisement

Risks of surgery recovery

In the UK, there are talks of elective surgery continuing until mid-April when government is expecting to need more beds for COVID-19 infected patients.

In Australia, Ramsay is talking to the government about assisting with surgery like cardiac and spinal operations that normally would be done in public hospitals, which will enable the public sector to free up intensive care beds.

The NSW government warns that the onset of COVID-19 during recovery from an operation is likely to complicate the recovery, and prolong the hospital stay, as well as expose healthcare workers who would then have to be excluded from healthcare work.

Jefferies analyst David Stanton said his discussions with industry players in Australia suggest that doctors and patients are deferring elective surgeries like hip or knee replacements in private hospitals, especially if they have symptoms of upper respiratory tract infections.

"We continue to believe healthcare facilities businesses, especially regional ones, might see decreased volume due to less elective surgery being performed," he said.

"In addition, those healthcare facilities might find it difficult to replace quarantined healthcare staff, which may lead to increased use of higher-priced agency staff."

Dr Stanton said he sees the potential for downside risk greatest for private hospitals, and he recently cut his forecast to sit 5 per cent below the bottom end of company full-year 2020 NPAT guidance.

How the coronavirus is changing markets, business and politics.

Carrie LaFrenz has more than 10 years' experience as a business journalist having previously covered healthcare, retail/consumer goods, industrials and agribusiness. She is based in our Sydney newsroom. Connect with Carrie on Twitter. Email Carrie at carrie.lafrenz@afr.com

More than 10,000 people poured into the nation's capital on the ninth day of protests over police brutality, but what awaited them was a city that no longer felt as if it was being occupied by its own country's military.